Mohammed bin Salman, the Crown Prince of Saudi Arabia commonly known as MBS, is offering deals for multinational corporations, including a 50-year tax vacation to move to the capital, Riyadh, as he wants to rehabilitate himself as a pro-business modernizer after the disastrous reputation damage from the state-sanctioned murder of Jamal Khashoggi.
However, the drive to fill some of the 59 skyscrapers of Riyadh’s troubled King Abdullah Business Park with the headquarters of prestigious IT and financial companies has largely failed.
Companies, including Google and Siemens, appear to be maintaining their regional hubs in the United Arab Emirates (UAE), despite the initiative’s target, code-named Program HQ, according to a report in London. Financial times. The program’s headquarters is itself part of MBS’s ten-year master plan to rid the country of oil revenues, Vision2030, which also includes the construction of a massive $ 500 billion pleasure city to try to emulate Dubai as a tourist hub.
Despite having failed to attract a star firm so far, some large companies are increasing their presence in Saudi Arabia by opening or expanding offices in the park.
For example, last month, Google Cloud agreed with Saudi Aramco, the state oil company, to provide infrastructure for cloud computing services, which will lead to the technology company opening its first office in the kingdom. Alibaba and Western Union have also reportedly increased their footprint in the country and opened larger offices.
Influential Saudi officials have been tasked with meeting MBS’s needs by luring companies from neighboring jurisdictions such as Dubai and Abu Dhabi. These UAE city-states are much more cosmopolitan and liberal than ultra-conservative Saudi Arabia, where alcohol is still completely banned, there is no hint of Western social life and women are second-class citizens.
MBS’s response to these social and gender restrictions, which are ingrained in the Wahhabi-influenced culture of Saudi Arabia, was to begin work on a $ 500 billion tourist and leisure city called NEOM. NEOM is located 1000 miles from Riyadh on the Red Sea and otherwise banned Western delights will be allowed there. The seaside town will have a parallel legal system, directly chaired by MBS. While this is meant to make foreigners feel safe, given its murderous reputation, it could very well have the opposite effect.
Justin Scheck, the co-author of Blood and oil, the bestselling biography of Mohammed bin Salman, told The Daily Beast: “The biggest challenge MBS has in reshaping the Saudi economy is getting foreign companies to invest in Saudi Arabia. Even before Khashoggi, the way the foreign business leaders wanted to do business with him was different from the way he wanted to do business with them. They just wanted him to give them money. He wanted them to invest in Saudi Arabia. Despite all these temptations, it didn’t happen. “
Scheck says there are business doubts about the country’s ethical standards, and that the Khashoggi affair has made it “more difficult than expected” to attract large companies. Even Uber, in which the Saudis own a 5.3 percent stake, has condemned the country and its leadership over the 2018 Khashoggi murder.
MBS has made only symbolic gestures for transparency about the murder: eight unidentified officers were sentenced to seven to 20 years in prison for the murder of Khashoggi in a secret trial. MBS has not accepted responsibility for ordering the murder, even though the CIA and a UN investigation both concluded that he was guilty. The Saudi authorities never said what happened to Khashoggi’s remains after his body was cut with a bone saw in the Turkish embassy.
A new film, Oscar-hyped documentary The Dissident, will make it even more difficult for Saudi Arabia to proceed with money laundering. The director of the film, Bryan Fogel, gains access to the room where Khashoggi was murdered and reports that his body was likely transported to the Saudi consul’s house and burned in a tandoori oven.
Scheck points out that even for those companies willing to shake off the country’s ongoing and blatant human rights violations, Saudi Arabia’s small population is a major factor in why many Western companies are not interested in accepting MBS’s investment invitations, no matter how many tax breaks or special carve-outs of local laws it offers.
The only thing he can’t fix is that no matter how rich the country is, it has a population roughly the size of Mexico City. So why would you want to build a car factory there? The local market is simply not big enough, ”says Scheck.
In view of this demographic destination, MBS is now urgently seeking to attract international headquarters to close the gap and help Saudi Arabia become a normal tax economy rather than one funded by the ever-depleting oil wealth.
For MBS, making this transition a very personal mission is now a very personal mission and one on which it has established its reputation, so human resources departments of foreign companies are reassured that their staff at NEOM can let their hair down. While strategy papers leaked last year, including plans for a massive artificial moon, glow-in-the-dark beaches and flying drone taxis, the reality so far is that the project is just another troubled Saudi construction site entangled in allegations of corruption, death and malpractice.
An expatriate living in Saudi Arabia told The Daily Beast that after the 2017 Sheikhdown, in which hundreds of prominent Saudis were held at the Ritz-Carlton hotel, beaten and tortured in some cases until they signed confessions of corruption and the government huge chunks of their fortunes, there was little point in criticizing MBS: “A lot of people think NEOM is going to be a complete disaster. It looks like a city as drawn by a toddler. But no one is going to say that. MBS can throw you in jail for disagreeing with him. “
Scheck says such criticisms simply prompt MBS to double down on its moonshot plans. “For MBS, his legitimacy as the country’s future monarch is tied to the success of Vision 2030. When people criticize things like NEOM, he just digs further.”
It seems likely that small successes in luring tenants will be lavishly packaged as a regional triumph and will be revealed at the annual investor conference of the Public Investment Fund, the sovereign wealth fund chaired by MBS, scheduled to begin on January 27.
A manager told me FT he believed the kingdom hoped to use the conference to negotiate deals with companies that had provisionally agreed to move from Dubai to Riyadh.
A Saudi government adviser who was briefed on the plans said, “It’s about attracting major international anchor tenants.”
The incentives offered include a 50-year duty-free day, waiving quotas for the employment of Saudis, and guarantees of protection against future regulations.
Another source with close ties to many senior Saudis who have been imprisoned or currently under house arrest by MBS told The Daily Beast, “Saudi royals are used to getting their way. The vast majority of those in prison or under arrest are not a threat to him; he just can’t tolerate the prospect that they might disagree. “
The source refers to the recent jail sentence of Loujain al-Hathloul, 31, the activist who spearheaded the successful campaign to get women to drive. In December, it was announced that she was sentenced to five years in prison. Her rap magazine? “Call for change.”
The source said, “It just isn’t credible that big American companies will unite with such a regime. Maybe they get bottom feeders. But companies with a public share of the cancellation culture? They are going to run a mile. “